Nanya posts record quarterly losses on glut

Nanya Technology Corp (南亞科技), the nation's second-largest computer memory chipmaker, posted record quarterly losses yesterday for last quarter as prices collapsed on a glut, but expected a nascent price rebound would result in a profitable second half.

In the quarter ending on Dec. 31, Nanya lost NT$8.17 billion (US$251.8 million), or minus NT$1.74 per share, compared with net profits of NT$6.46 billion, or NT$1.7 a share, the previous year.

Revenues were halved to NT$10.37 billion from NT$22.33 billion, it said.

Nanya Technology, based in Taoyuan, said a 75 percent year-on-year price decline was behind the worst-ever fourth quarter, but added it did not plan to slow down capacity expansion.

INVESTMENTS

The chipmaker intends to spend NT$40 billion on new equipment and facilities this year, primarily at its new 12-inch plant, slightly lower than last year's NT$47 billion.

"We are optimistic about the second half. We expect supply will tighten because of limited additional supply and growing demand for higher density memory -- especially corporate replacement demand," Nanya Technology spokesman Pai Pei-lin (白培霖) told a press briefing.

"We hope to book profits in the second half," Pai said.

Commenting on this quarter, Pai said chip prices on contract basis would bounce back slightly, supported by short-term Lunar New Year demand in the Chinese market, followed by a faster uptick in the second quarter over the easing supply glut.

CAUTION

Rick Hsu (徐稦成), a semiconductor analyst at Nomura Securities Co Ltd's (野村證券) Taipei branch, was not as enthusiastic.

"I think Nanya is overoptimistic about the price rebound. I think the recent improvements in demand will be short-lived and seem unrealistic," he said.

Hsu expects Nanya Technology to report another significant loss this quarter amid lingering oversupply and predicts the company may see a turnaround sometime in the second half.

Output is expected to grow 10 percent to 15 percent during the current quarter and by about 80 percent annually after its first 12-inch plant reaches full, 62,000-wafer-per-month capacity by the end of this year, Pai said.

Inotera Memories Inc (華亞科技), a joint venture between Nanya Technology and Qimonda AG, also posted historical high quarterly losses yesterday at NT$3.66 billion for the last quarter of last year, from a net income of NT$4.89 billion the previous year.

Inotera intends to cut capital spending this year by 31 percent to NT$30 billion, mainly on upgrading manufacturing technology to the more cost-efficient 70-nanometer technology. Spending last year was NT$44 billion.

"No progress will be made on the [planned] third plant this year. Making a money-losing investment would simply be the wrong thing to do," company spokesman Charles Kau (高啟全) said. "The market is worse than we expected."

OPTIMISM

Five-year-old Inotera, however, expects to make a profit this year, Kau said. Last year, Inotera made NT$927 million net profits, compared with Nanya Technology's losses of NT$9.37 billion.

Nanya Technology shares fell 6.45 percent to NT$17.4 yesterday.

Inotera and local rival Powerchip Semiconductor Corp (力晶半導體) dropped by the 7-percent daily limit to NT$24.9 and NT$13.05 respectively.

Powerchip, the nation's top computer memory chipmaker, is expected to post record quarterly losses of NT$8.46 billion next Wednesday for the fourth quarter, Morgan Stanley said.